A response to Jon Chase...

Glenn at Instapundit linked to an editorial by Jon Chase at Popular Science that I found interesting. His basic take is that we better start making advertisement work for us again or we are going to lose all the content we hold precious.

I'm going to be straight with everyone. Commercial advertisements have never worked. They don't encourage people to buy your product, or rather; the cost you spend on advertising is generally not worth the increase in sales that you receive. If you are depending on advertising to sell your product, then you are doomed.

There might have been a time 40 years ago or so when that wasn't true, but since that time the public has become too diverse in their tastes and interests and too jaded to successfully pitch too.

When I was a teenager, I started keeping track of all the times I bought a product because of an advertisement I had seen. It was a dismally small amount from the perspective of an ad agency, especially when you look at the amount of money I spent. It remains a very small amount. I suspect that I'm fairly typical in that. Jon says he's never clicked on an advertisement willingly. How many times have any of you watched a commercial and then actually been persuaded to spend money on something you wouldn't have spent otherwise? I'd hazard that its not many times, especially compared to the enormous sums of money that are spent to govern your tastes, preferences, and buying habits.

Americans are simply too ad savvy now. They don't like them. They don't trust them. They ignore them.

Back in the middle of the dot com boom, I used to say that the problem with most dot com's was that they didn't know what they were selling. The Internet is only good for selling one product - information. If your product on the Internet isn't information, forget about it. Build a brick and mortar first. Even online retail outlets like eBay aren't really selling products. They are really selling information about buyers and sellers which is otherwise difficult to obtain. Retailers like Amazon are doing the same thing in more subtle ways. Online retails aren't selling clothes or whatever. They are selling information about clothes that otherwise would take hours of store shopping to acquire. That is their real competitive edge.

And that's the only thing about advertising that really works. The only thing advertising is good for is getting information out there. All the high priced ad agencies are adding very little value to the ads. I can't remember who is selling what even when I like the commercial and find the jingle catchy. But if I'm already shopping for something it’s the information that I have at hand that is the deciding factor in what I buy. And the thing is that when it comes to providing information, the net beats advertisements up and down the block. I don't need ads to discover anything any more. Three weeks after a product has come out, forget about it. It's too late for ads to do anything.

The vast majority of my initial product purchases are now shaped entirely by 'word of mouth' in some form whether it’s some other person mentioning something that they've found or reading about it in a blog. I take that unsolicited endorsement to be of much much more value than any advertisement, especially if I know the person and trust their taste. And it’s not something you can buy, because buying it completely undermines its value. The best you can do is try to barter for it but once that barter economy moves to outright bribery, it again destroys its value.

So I'm going to be honest with you. I think you in the traditional media are all doomed. I think traditional advertising and traditional media are dinosaurs wandering around wondering what happened to the climate and kidding themselves that this is some passing thing. I really do think we are going to move to entirely different modes of how people pay for content. I came to this realization from reading 'Sluggy Freelance'. It's free content. But provably, its fans will pay to sustain it. There is alot of media like that flying under the radar in what is now the long tail but will I think prove to be the next big thing. Michael Totten is an example of new journalism media that works under the premise that it’s free but fan supported. K-Love is an example of a radio station that works under the premise that it is free but fan supported and even to some extent so are ordinary public TV and radio stations. There are guys out there making living (Spider Software for example) selling products essentially to a fan community. It's not micropayments, its something else almost entirely new. It's like these people convince other people to adopt them into their family or clan, and then once in the family can ask to be supported in return for the important role that they play in family cohesiveness. Or maybe it’s something more like how the aristocracy used to be patrons of artists, because otherwise there would be no art. Well, now with our modern prosperity, it is the patronage of the comfortable plebeian that supports the arts.

At some point, some smart ad agency is going to figure out that traditional advertising is dead, and they are instead going to corner the market that really counts - the nodes in the social network that shape tastes and introduce people to new tastes. I bet if you could figure out who the right 10,000 or so people were that really mattered in a particular field or subject (fewer in specialized subjects), that you could dispense with advertising to the rest of us and just let their opinions guide us to your product with far greater efficiency than broadcasting to the world and hoping someone was tricked into trying your product.

Now take a look at the banner for Cardshark I have up over there. They aren't paying me anything for that. I'm not selling cards there right now. I don't get anything if you click on it. But that's a small scale website based on selling information about buyers and sellers and I'm willingly promoting it just because I like doing business there. It's exactly a case in point. Even consider how much advertising is actually in this post. If I had any readers, which I don't because I don't post, the links in this post would receive far more attention than the pitiful ad links on my page that you are rightfully ignoring.